[Federal Register Volume 64, Number 122 (Friday, June 25, 1999)]
[Notices]
[Pages 34417-34433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16018]
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DEPARTMENT OF ENERGY
Western Area Power Administration
2004 Power Marketing Plan
AGENCY: Western Area Power Administration, DOE.
ACTION: Notice of the final 2004 Power Marketing Plan.
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SUMMARY: Western Area Power Administration (Western), a Federal power
marketing administration of DOE, announces its 2004 Power Marketing
Plan (Marketing Plan) for the Sierra Nevada Customer Service Region
(Sierra Nevada Region). On December 31, 2004, all of the Sierra Nevada
Region's long-term firm Central Valley Project (CVP) power sales
contracts will expire. This notice responds to the comments received on
the Proposed 2004 Power Marketing Plan (Proposed Plan) and sets forth
the final Marketing Plan. The Marketing Plan specifies the terms and
conditions under which Western will market power from the CVP and the
Washoe Project beginning January 1, 2005. This Marketing Plan
supersedes all previous marketing plans for these projects.
Western plans to amend existing customers' power sales contracts to
provide them with the right to purchase a percentage of the Sierra
Nevada Region's power resources beginning January 1, 2005. After
Western more fully develops products and services, it will offer new
contracts for the sale of power under the Marketing Plan. Western will
request entities who meet the criteria defined in the Marketing Plan,
and who wish to apply for a new allocation of power from Western, to
submit formal applications. Application procedures will be set forth in
the Call for 2005 Resource Pool Applications in a separate Federal
Register notice.
DATES: The Marketing Plan will become effective July 26, 1999.
FOR FURTHER INFORMATION CONTACT: Power Marketing Manager, Western Area
Power Administration, Sierra Nevada Customer Service Region, 114
Parkshore Drive, Folsom, CA 95630, telephone (916) 353-4416.
SUPPLEMENTARY INFORMATION:
Authorities
The Marketing Plan for marketing power after 2004 by the Sierra
Nevada Region is being established pursuant to the Department of Energy
Organization Act (42 U.S.C. 7101-7352); the Reclamation Act of June 17,
1902 (ch. 1093, 32 Stat. 388) as amended and supplemented by subsequent
enactments, particularly section 9(c) of the Reclamation Project Act of
1939 (43 U.S.C. 485(c)); and other acts specifically applicable to the
projects involved.
Development of the 2004 Power Marketing Plan
Western began developing the Marketing Plan with a series of three
informal public information meetings. These meetings helped Western
identify pertinent issues and possible marketing options, including
types of products and services, and eligibility and allocation
criteria. During that process, Western evaluated several options for
marketing power after existing contracts expire.
Western began the Administrative Procedure Act process with its
Notice of Proposed Plan in the Federal Register (62 FR 8710, February
26, 1997). Western held a public information forum on April 8, 1997, to
present the Proposed Plan and answer questions. On April 24, 1997,
Western held a public comment forum to accept verbal comments on the
Proposed Plan. In addition, Western accepted written comments from the
public through May 27, 1997. Western considered the comments received
in developing the Marketing Plan.
In a separate public process, Western explored the impact of
electric utility industry restructuring on Western's power allocation
policies. A Notice of Inquiry for this process was published in the
Federal Register (63 FR 66166, December 1, 1998). Western held a public
comment forum on January 6, 1999, and accepted written comments through
January 15, 1999. The results of this process will be published in a
separate Federal Register notice.
Western opened an additional comment period focused solely on the
size of project-specific resource pools because several Native American
tribes commented on the size of these pools. The Notice of Public
Process on Resource Pool Size was published in the Federal Register (64
FR 4646, January 29, 1999). Western held informational meetings on its
resource pool size proposals and the requirements for receiving an
allocation of power in Phoenix, Arizona, on February 3, 1999;
Albuquerque, New Mexico, on February 5, 1999; and Folsom, California,
on February 9, 1999. Western accepted written comments from the public
through March 1, 1999. Western also considered the comments related to
the Sierra Nevada Region's resource pool received during this comment
period in developing the Marketing Plan.
Western will market the Sierra Nevada Region's power resources
consistent with the Power Marketing Initiative under the Energy
Planning and Management Program (EPAMP) (60 FR 54151, October 20,
1995). Western will initially offer 96 percent of the Sierra Nevada
Region's power resources to existing customers and allocate, under a
separate process, the remaining resources using the criteria in the
Marketing Plan. Under a separate process, Western will reduce all
customers' allocation percentages by up to 2 percent and establish a
2015 Resource Pool. The Marketing Plan provides a balance between
existing and new customers, including Native American tribes, while
meeting Western's contractual obligations that continue beyond 2004. If
unexpected circumstances cause early termination of existing electric
service contracts, Western may market its power resources under the
Marketing Plan before January 1, 2005.
Background
CVP power facilities include 11 powerplants with a maximum
operating capability of about 2,044 megawatts (MW), and an estimated
average annual generation of 4.6 million megawatthours (MWh). Western
markets and transmits the power available from the CVP.
Western owns the 94 circuit-mile Malin-Round Mountain 500-kilovolt
(kV) transmission line (an integral section of the Pacific Northwest-
Pacific Southwest Intertie (Pacific Intertie)), 803 circuit miles of
230-kV transmission line, 7 circuit miles of 115-kV transmission line,
and 44 circuit miles of 69-kV and below transmission line. Western also
has part ownership in the 342-mile California-Oregon Transmission
Project. Many of Western's existing customers have no direct access to
Western's transmission lines and receive service over transmission
lines owned by other utilities.
The Washoe Project, Stampede Powerplant, has a maximum operating
capability of 3.65 MW with an estimated annual generation of 10,000
MWh. Sierra Pacific Power Company owns and operates the only
transmission system available for access to Stampede Powerplant.
The following table lists estimates of CVP power resources and
adjustments. This table is for informational purposes only, and does
not imply that the power resources and adjustments shown will
[[Page 34418]]
be the actual amounts available or adjustments applied.
Estimated CVP Power Resources and Adjustments
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Power resources/adjustment Range/value
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Annual energy generation........................ 2,400,000-8,600,000 MWh.
Monthly energy generation....................... 100,000-1,100,000 MWh.
Monthly capacity................................ 1,100-1,900 MW.
Annual project use.............................. 670,000-1,670,000 MWh.
Monthly project use............................. 10,000-180,000 MWh.
Monthly project use (on peak)................... 30-230 MW.
Monthly maintenance............................. 0-300 MW.
Reserves--hydro................................. Minimum 5% of monthly capacity
CVP transmission and transformation losses from 1.8% (currently).
the generator bus to a 230-kV load bus.
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Legal Analysis
Regulatory Flexibility Analysis
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601, et seq.),
requires Federal agencies to perform a regulatory flexibility analysis
if a final rule is likely to have a significant economic impact on a
substantial number of small entities and there is a legal requirement
to issue a general notice of proposed rulemaking. Western has
determined that this action does not require a regulatory flexibility
analysis since it is a rulemaking of particular applicability involving
services applicable to public property.
Environmental Compliance
In compliance with National Environmental Policy Act (NEPA) (42
U.S.C. 4321, et seq.), Council on Environmental Quality NEPA
implementing regulations (40 CFR parts 1500-1508), and DOE NEPA
implementing regulations (10 CFR part 1021), Western completed an
environmental impact statement (EIS) on EPAMP. The Record of Decision
was published in the Federal Register (60 FR 53181, October 12, 1995).
Western also completed the 2004 Power Marketing Program EIS (2004 EIS),
and the Record of Decision was published in the Federal Register (62 FR
22934, April 28, 1997). The Marketing Plan falls within the range of
alternatives considered in the 2004 EIS. This NEPA review identified
and analyzed environmental effects related to the Marketing Plan.
Marketable CVP and Washoe Project electrical capacity and energy is
influenced by available reservoir storage and water releases controlled
by the U.S. Department of the Interior, Bureau of Reclamation
(Reclamation). Pursuant to the CVP Improvement Act of 1992 (Pub. L.
102-575, Title 34) (CVPIA), Reclamation prepared a programmatic EIS
(PEIS) addressing improvements to fish and wildlife habitat stipulated
therein, and potential changes in CVP operations and water allocations
to meet those obligations. Actions based on the PEIS may result in
modifications to CVP facilities and operations that would affect the
timing and quantity of electric power generated by the CVP. Such
changes may, in turn, affect electric power products and services to be
marketed by Western. The Marketing Plan is designed to accommodate
these changes. Western is a cooperating agency in Reclamation's PEIS.
Review Under the Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.
3501, et seq.), Western has received approval from the Office of
Management and Budget for the collection of customer information in
this rule, under control number 1910-0100.
Determination Under Executive Order 12866
Western has an exemption from centralized regulatory review under
Executive Order 12866; accordingly, no clearance of this notice by the
Office of Management and Budget is required.
Small Business Regulatory Enforcement Fairness Act
Western has determined that this rule is exempt from congressional
notification requirements under 5 U.S.C. 801 because the action is a
rulemaking of particular applicability relating to services and
involves matters of procedure.
Responses to Comments Received on the Notice of Proposed Plan (62
FR 8710, February 26, 1997)
During the public consultation and comment period, Western received
26 letters commenting on the Proposed Plan. In addition, 12 customer
and interested party representatives commented during the April 8 and
April 24, 1997, public forums. Western reviewed and considered all
comments received by the end of the public consultation and comment
period, May 27, 1997, in preparing the Marketing Plan.
The following is a summary of the comments received during the
consultation and comment period, and Western's responses to those
comments. Comments are grouped by subject and paraphrased for brevity.
Specific comments are used for clarification where necessary.
I. Public Participation and Process Implementation
Comment: Commentors supported the process Western used in
developing the Marketing Plan. One comment expressed concern about the
lack of opportunity for public participation.
Response: Western provided opportunities for public participation
in preparing the Marketing Plan, 2004 EIS, and EPAMP, as described in
this notice.
Comment: Some commentors said that since the contracts do not
expire until 2004, Western should delay the Marketing Plan process.
This delay would allow time to resolve uncertainty about the future of
the industry, and allow other interests time to make arrangements to
share power revenues with environmental and clean power goals. Other
comments supported developing the Marketing Plan on the proposed
schedule to provide customers with lead time for planning purposes.
Response: Because electric utility industry restructuring is
already underway, delaying decisions may foreclose options for Western
and its customers. To be an active participant in the newly
restructured industry, Western needs to identify and work with its
future customers to develop specific products to meet their needs. For
many of Western's customers, Federal hydropower is a critical component
of their resource mix, and knowledge of CVP resource availability is
crucial to planning strategies for
[[Page 34419]]
dealing with utility restructuring. It is important that the Marketing
Plan is not delayed because it takes time to develop contracts and
arrange for transmission service. Western recognizes the need for
flexibility in the changing utility industry and will offer Custom
Products, such as firming power and ancillary services, to meet
customers' needs. The Marketing Plan will not impact existing
arrangements concerning funding of environmental restoration or
advancement of clean power goals. These items are discussed more
thoroughly in our responses to other comments.
II. Environmental Issues
Comment: Commentors stated that there are unresolved environmental
issues associated with the operation of CVP dams, and that
environmental protection mechanisms are insufficient or outdated. A
commentor stated that if a contract extension decision is part of the
Marketing Plan, new environmental protection mechanisms must be
developed. Western was urged to create a trust fund(s) in which a
portion of Western's existing power revenues would be set aside to
mitigate environmental damage associated with operation of the Federal
dams and to support the development of energy efficiency and renewable
energy. Also, questions were raised as to whether Western has complied
with NEPA in developing the Marketing Plan.
Response: Western completed the 2004 EIS in accordance with NEPA,
the Council on Environmental Quality NEPA implementing regulations, and
DOE's NEPA implementing regulations. The 2004 EIS examined the
environmental impacts and identified no significant impacts to the
human environment from marketing power from the CVP and Washoe Project.
The Marketing Plan falls within the parameters analyzed in the 2004
EIS. The operation of CVP dams is dictated by other authorized project
purposes such as flood control, navigation, water supply, and fish and
wildlife. Environmental issues associated with the operation of CVP
dams are being addressed by the CVPIA PEIS, including direct and
indirect impacts on all fish, wildlife, and habitat restoration actions
and the potential renewal of existing CVP water contracts. Western is a
cooperating agency in Reclamation's PEIS process.
CVP power customers contribute significant revenue to the
Restoration Fund, established under the CVPIA, which is designed to
mitigate environmental consequences of the operation of Federal dams.
Western supports renewable energy through its Policy for the Purchase
of Non-Hydropower Renewable Resources (61 FR 43051, August 20, 1996).
In accordance with the Energy Policy Act of 1992, Western encourages
energy efficiency by requiring all firm power customers to prepare and
keep current integrated resource plans.
III. Products and Services
A. Base Resource
Comment: Several commentors requested that Western reconsider its
proposal to market power on an as-available basis. Suggestions were
made that the Base Resource be further developed, including evaluation
of purchasing energy, especially in dry years, to provide some minimum
level of firm power and maximize use of the transmission assets
available to Western, including the Pacific Intertie. Comments included
requests for more information on firm availability, pricing, timing of
commitment to purchase the Base Resource, and reliability of the Base
Resource.
Response: CVP generation is expected to vary hourly, daily,
monthly, and annually, based on hydrological conditions and other
constraints that govern CVP operations; therefore, Western cannot
accurately predict future availability. However, Western is willing to
purchase energy to maintain some firm level of service to all
customers. The amount of firming and the use of Western's transmission
resources will be further developed by Western through a collaborative
process with customers prior to product commitment by a customer.
Because Western's rates will be determined through a separate public
process, product pricing is outside the scope of the Marketing Plan.
However, the costs associated with the hydropower system may be
discussed during the collaborative process.
Comment: A commentor stated that the Base Resource concept will
require a new and much closer working relationship with Reclamation,
Federal water users, and other stakeholders.
Response: Western will continue to develop close working
relationships with Reclamation, Federal water users, and other
stakeholders.
Comment: One commentor asked if Western will include reserves or
other ancillary services in the Base Resource.
Response: The Base Resource may be used in a manner the customer
deems most beneficial, within operational constraints. Operating
reserves and other ancillary services will be consistent with industry
standards or may be provided with the Base Resource or the Custom
Product on an as-requested basis. Provision of ancillary services,
including reserves, will be developed with customer input.
B. Custom Product
Comment: Commentors suggested that Western develop some
``standardized'' Custom Products to allow customers to select a more
firm service, similar to what is currently marketed. A commentor stated
that negotiating with customers individually for firming the Base
Resource would be more difficult, less transparent, and would increase
risk. One commentor questioned whether the design of Custom Products
would potentially cause cost-shifting among customers.
Response: Western designed the Marketing Plan to provide maximum
flexibility to its customers. Development of ``standardized'' Custom
Products for a customer or group of customers is not precluded by the
Marketing Plan. The Marketing Plan was designed with this possibility
in mind. Prior to product commitments, using a collaborative process,
Western will develop Custom Products that most closely match customer
needs. Using this collaborative approach will help ensure that
information about Custom Product options will be available to everyone
to minimize the risk of inequities. Also, by considering the needs of
all similarly situated customers, due to economies of scale, Western
may obtain better prices in the electric utility market when making
firming purchases or obtaining other related services. Because all
customers will equitably share in the cost of the Base Resource and
each customer will pay only for the Custom Products which it
specifically requests, any potential for cost-shifting is minimal.
Comment: A commentor suggested that Western needs to consider
potential ramping rates if a customer chooses to schedule power
deliveries.
Response: Under the Marketing Plan, all customers will be required
to schedule power deliveries. Information on ramping rates applicable
to the hydropower system will be made available prior to beginning
service.
Comment: One commentor stated that preference customers should be
allowed to help provide the products and services needed to firm the
Base Resource for other customers wanting a firm Custom Product.
Response: The Marketing Plan does not preclude Western or customers
from purchasing products and services from any supplier.
[[Page 34420]]
C. Exchange Program
Comment: Commentors supported and recommended further development
of the concept of the Western-managed exchange program.
Response: Western will complete development of the exchange program
through a collaborative process with customers.
D. Energy Banking Arrangements
Comment: A commentor said Western should begin planning now for
termination of existing banking arrangements with Pacific Gas &
Electric Company (PG&E) under Contract 14-06-200-2948A. If the existing
account is ``cashed out,'' the benefits should be shared with all
customers. Commentors suggested that Western pursue energy banking and
firming arrangements beyond 2004, even though it may be difficult.
Response: Since existing banking arrangements will expire on
December 31, 2004, they are outside the scope of the Marketing Plan.
Western is willing to explore banking arrangements and other options
during further development of the exchange program and Custom Products.
IV. Proposed Resource Percentages/Pools
A. Allocation Methodology
Comment: A commentor requested that Western accommodate the
seasonal nature of agricultural loads.
Response: The Base Resource depends on the generation pattern of
the CVP, which is similar to the pattern of agricultural loads. If the
Base Resource does not accommodate the seasonal nature of agricultural
loads, Western will work with customers to develop Custom Products that
will meet the customers' needs to the extent possible.
Comment: One commentor stated the Marketing Plan should not affect
its contractual rights through 2004 to increase its contract rate of
delivery (CRD) up to 50 MW.
Response: The Marketing Plan does not affect current contractual
rights. If necessary, Western will accommodate these CRD increases and
will effectuate related CRD decreases as provided for in certain
existing contracts.
Comment: A suggestion was made that both energy and capacity should
be used to determine customer resource extensions instead of the
proposed CRD methodology. A comment further suggested that not using
energy penalized customers with higher load factors for maintaining
good load shapes. If rates are to be based on a split between capacity
and energy, then the allocation should be based on capacity and energy.
Response: Existing customers' current allocations are based on
capacity. Western believes that it is equitable to base the existing
customers' resource allocation percentages on existing capacity
commitments because, under existing contracts, Western's capacity
obligation is fixed but the energy obligation is not. Many customer CVP
energy purchases are based on economics, not on their load shape or
energy entitlement. Unlike the current allocation methodology, the
resources available under the Marketing Plan are based on generation
rather than load. Basing the right to purchase generation output, which
is limited by the capacity of the plants, on a CRD does not penalize
customers with high load factors, rather it gives them no greater
consideration. Allocating the power resources based on a rate design is
not appropriate because the rate design for power sold under the
Marketing Plan has not been determined and may be different from
today's rate design.
B. Allocation Amounts
Comment: Western was requested to increase the 2005 Resource Pool
percentage. Another comment requested withholding application of the
Power Marketing Initiative, particularly during the period from 2005
through 2014 (when the Sacramento Municipal Utility District (SMUD)
settlement is in effect).
Response: Comments received did not provide rationale for changing
the resource pool percentages. However, Western considered many factors
in determining the magnitude of the resource pools. Those factors
included: (1) The loads of preference entities that applied for but did
not receive power under the 1994 Power Marketing Plan; (2) impacts of
restructuring and open transmission access; (3) the potential for new
loads, including those of Native American tribes; and, (4) existing
customer loads with limited Federal power compared to their needs.
After careful consideration, Western determined that the combined
resource pools in 2005 and 2015, totaling up to 6 percent of the Base
Resource, would be equitable for potential new customers as well as
existing customers. Withholding application of the Power Marketing
Initiative (establishment of the resource pools) would potentially
eliminate the ability of Western to serve new customers that may
benefit from a Federal power allocation.
Comment: Some commentors stated that Western should maximize the
global value of its Base Resource by minimizing both reductions and
increases in the allocations that Western's current customers receive.
Response: The Marketing Plan provides for minimal increases or
reductions in the pro rata amount of the power resources available to
existing customers. However, due to the expiration of Contract 14-06-
200-2948A with PG&E, and the associated firming arrangements, the
Sierra Nevada Region may not be able to market power at the same level
as in the past. Under the Marketing Plan allocation method, each
allottee will receive a percentage of actual generation. The amount of
power associated with an allocation percentage will vary, based on
hydrological conditions and other constraints that govern CVP
operations. The Marketing Plan attempts to mitigate reductions in
availability or usability of the power resources for meeting customers'
loads by offering the Custom Product, which could include a level of
firming purchases.
Comment: A comment requested that allocation amounts reflect a
customer's CRD as opposed to actual load.
Response: Western has decided that an existing customer's
allocation percentage will be based on the customer's extension CRD.
Western will adjust the existing customer's percentage if its actual
load is less than the extension CRD. This criteria was adopted because
Western does not believe it is sound business practice to allocate
power based on a historical CRD that has never been fully used.
Comment: Commentors requested that temporary allocation increases
remain with the current recipients.
Response: Contracts implementing the temporary reallocations
provide that the original CRD be returned to the original customer.
Comment: One commentor suggested that the minimum load requirement
for the resource pools be 500 kW instead of 1 MW.
Response: To avoid precluding smaller entities from receiving
allocations from the resource pools, Western has modified the Marketing
Plan to allow requests to serve loads that are less than 1 MW, but at
least 500 kW, if they can be aggregated so Western can schedule and
deliver to a minimum load of 1 MW.
Comment: A commentor objected to Western's approach regarding
SMUD's rights under the 1983 Settlement Agreement in the Proposed Plan.
The commentor urged Western to reach an accommodation with SMUD that
would provide for SMUD's resource extension to be made on the same
basis as all other existing customers, and questioned the logical basis
for the fraction 360/1,152.
[[Page 34421]]
Public participation and joinder in regard to the SMUD settlement were
also questioned. Further, it was recommended that if SMUD does not
voluntarily agree to a reasonable accommodation, Western should recoup
the over-allocation during the second 10-year period. Another commentor
supported Western's approach.
Response: Contract DE-MS65-83WP59070 (Settlement Agreement) between
Western and SMUD, dated April 15, 1983, provides that SMUD has a right
to purchase 360/1,152 of all power allocated or sold by Western on or
after January 1, 2005, through December 31, 2014. This Settlement
Agreement was reached to resolve a lawsuit, United States of America v.
Sacramento Municipal Utility District, Civil No. S-75-277, United
States District Court for the Eastern District of California. The
Marketing Plan is designed to mitigate the impacts of the Settlement
Agreement on other customers by offering an Optional Purchase, which is
equal to the additional amount of power allocated to SMUD. Western will
adjust SMUD's percentage of the available resources after 2014 to put
it on the same basis as other existing customers. The adjustment will
include the amount that would have been contributed to the 2005
Resource Pool by SMUD in absence of the Settlement Agreement. Western
does not agree that SMUD will receive an over-allocation for the first
10 years under the Marketing Plan because SMUD's percentage allocation
is specified in the Settlement Agreement. Therefore, SMUD should not be
penalized during the second 10 years of the Marketing Plan. The
fraction 360/1,152 referenced in the Settlement Agreement represents
SMUD's CRD of 360 MW and Western's maximum simultaneous load level of
1,152 MW at the time of the settlement.
Allowing public participation in litigation would severely
undermine Western's ability to protect the Government's interest.
Western is not required to join every preference customer or every
potential preference customer in a lawsuit in which Western is a party.
Upon proper motion, the court determines when and if joinder of a
person is needed for just adjudication.
C. Allocations Due to Special Circumstances
Comment: Commentors requested that CVP power continue to be
available at cost to long-term customers. If these customers do not
receive a power allocation under the Marketing Plan, the economic
consequences would be significant.
Response: Western will offer the greater portion of the CVP
resources to existing customers. The economic analyses done for the
2004 EIS showed that the greatest socioeconomic benefits would be
expected to occur if Western's existing customers continued to receive
power from Western.
Comment: A few commentors stated that Federal hydroelectric power
should be used to benefit the public. They suggested that Western give
priority to those who meet certain additional criteria, including,
demonstrating environmental responsibility in mitigating any damages
associated with Federal dams; developing and/or integrating solar and
other renewable energy and energy efficiency into their resource mix;
supporting educational institutions; and not requiring supplemental
purchases.
Response: Western markets power in a manner that will encourage the
most widespread use at the lowest possible rates consistent with sound
business principles. Within broad statutory guidelines and operational
constraints of the CVP, Western has wide discretion as to whom and
under what terms it will contract for the sale of Federal power, as
long as preference is accorded to statutorily defined public bodies.
Western cannot measure the value of the public benefits provided by an
entity when allocating its power and, therefore, will not base an
allocation on an entity's mission. Although not specifically addressed
in the Marketing Plan, Western supports programs for the public good.
Western supports renewable energy through its Policy for the
Purchase of Non-Hydropower Renewable Resources, and encourages energy
efficiency by requiring all firm power customers to prepare and keep
current integrated resource plans. Further, CVP power customers
contribute significant revenue to the Restoration Fund, established
under the CVPIA, which is designed to mitigate environmental
consequences of the operation of Federal dams.
Comment: A comment suggested that priority be given to entities
with longstanding requests.
Response: Previous requests were considered in determining the size
of the resource pool. Western receives numerous requests for power and
does not believe a previous request should be given a higher priority
over requests by qualified entities that have not applied previously.
Comment: A commentor suggested Western give higher priority to
entities that can readily accept an allocation.
Response: The Marketing Plan includes eligibility criteria
requiring that all applicants requesting power must be ready, willing,
and able to receive and use or distribute Federal power.
Comment: Western was requested to extend the spirit and concept of
the National Defense Authorization (NDA) Act. Several comments
requested that the definition of extension CRD be modified so that NDA
Act power used for economic development is not excluded. By doing so,
entities receiving allocations of NDA Act power for economic
development purposes would be eligible for resource extensions under
the Marketing Plan. One comment stated that the definition of extension
CRD violates the provisions of the NDA Act because the legislation
requires that NDA Act power be reserved for allocation for a 10-year
period (commencing November 30, 1993). This commentor contends that the
legislation provides for allocations made during this 10-year period to
extend past December 31, 2004. Commentors requested that NDA Act power
extend through the completion of economic development. Another
commentor requested that Western not extend the provisions of the NDA
Act past December 31, 2004.
Response: The Proposed Plan is consistent with the NDA Act.
However, Western has reconsidered its position regarding allocations
for NDA Act customers. Western has decided to extend the spirit and
concepts of the NDA Act to those existing customers receiving NDA Act
power for economic development purposes, provided those customers
continue to meet the eligibility requirements for an allocation under
the Marketing Plan. The Marketing Plan has been modified to reflect
this change.
V. General Criteria and Contract Principles
Comment: A commentor suggested that, under take-or-pay provisions,
the resale (remarketing) prohibition should be eliminated. Other
commentors stated that, in the competitive environment, Western will
not be able to enforce the resale prohibition, and customers will
receive an unfair advantage with the ability to ``profiteer'' in
regional electricity markets.
Response: Western is not convinced that the prohibition on
reselling Federal power should be eliminated due to the take-or-pay
provisions. Customers' loads are expected to be sufficient to use all
available Western power most of the time. Western realizes that, at
times, due to the variability of CVP generation,
[[Page 34422]]
some customers may not be able to use their full power allocation.
Therefore, Western will establish and manage an exchange program. Any
Western power that cannot be used on a real-time basis must be offered
to Western or to other preference customers under this program.
Comment: A comment suggested Western consider marketing a portion
of CVP capacity to the California Power Exchange or other marketers.
Response: Western markets power first to preference entities under
Reclamation laws. However, if Western is unable to market all of its
power to preference entities, it may be sold to others.
Comment: Many commentors supported the 20-year contract term,
citing the additional value of a long-term contract which allows
customers who purchase Federal power greater stability in planning for
future resources than would exist with a shorter contract term.
Other comments objected to a 20-year contract term citing reasons
for a shorter contract term. One commentor suggested contract terms of
no more than 5 years or auctioning contracts to qualified bidders.
Response: The 20-year contract term provides greater resource
certainty for Western customers in a restructured industry, and greater
certainty of revenues for project repayment by Western. Shorter
contract terms degrade the marketability of the resource and create an
administrative burden. An EIS, which included a significant amount of
analysis as well as a public involvement process, was conducted on the
provisions of EPAMP, including a 20-year term. The EPAMP EIS found that
longer contract terms were positive for the environment, as customers
were more likely to invest in renewable resources if they had a stable
foundation of Federal hydropower. Short-term contracts could lead
customers to develop resources that are cheaper in the short term but
more environmentally adverse. Future load requirements are not a
significant consideration as Western is a partial requirements provider
and is generally not responsible for meeting customer load growth.
Contract extensions would not preclude any Congressional or
administrative actions because contracts or rate changes could be
included as part of a sale or restructuring package. The Marketing Plan
does not impact or preclude future operational changes at Federal dams
because Western will market only the available power generation.
Because Western is required to market power at cost-based rates,
auctioning contracts is not practical. Power must be sold to preference
entities first and not just to the highest bidder. Western has included
the 20-year contract term in the Marketing Plan.
VI. First Preference
Comment: A comment supported using 20-year average historical
generation to calculate the maximum entitlement of first preference
customers (MEFPC), rather than a 5-year average. Other commentors
stated using 20-year average historical generation to calculate the
MEFPC is inappropriate because it does not account for generation lost
due to fishery restoration operations and other environmental factors,
would unfairly penalize other preference customers, and would exceed
statutory requirements. A commentor stated that first preference
customers should not be immune to the vagaries of generation. Some
comments requested a floor MEFPC be established, based on generation
prior to CVPIA operations. Using all historic generation before fishery
restoration was also suggested.
Response: The New Melones Project provisions of the Flood Control
Act of 1962 (76 Stat. 1173, 1191-1192) and the Trinity River Division
(TRD) Act (69 Stat. 719) (Acts) specify that first preference customers
are entitled to up to 25 percent of the power generated as a result of
the construction of the New Melones Project and the Trinity River
Division (first preference projects). Under its discretionary
authority, Western determines how the entitlements are to be
calculated. Western believes the most recent 20-year average historical
generation is consistent with the Acts because it accounts for
generation resulting from the first preference projects under a variety
of hydrological conditions, and takes into consideration impacts of
changing operations such as those contemplated under the CVPIA. The
Acts do not guarantee a minimum amount of power to the counties of
origin; therefore, Western does not believe a floor MEFPC is
appropriate.
Comment: A commentor requested more information on the calculations
used to determine the MEFPC.
Response: The Marketing Plan specifies the data to be used and how
the MEFPC will be calculated.
Comment: A commentor questioned why the MEFPC will only be adjusted
if, upon recalculation, it is 10 percent above or below the currently
effective MEFPC.
Response: To eliminate minor or short-term fluctuations, Western
has decided to adjust only for a 10 percent or greater difference in
the MEFPC.
Comment: Comments were received both in favor of and in opposition
to the first preference customers' full requirements option at the Base
Resource rate, without the take-or-pay provision. One commentor stated
that all customers should be treated economically the same.
Response: The full requirements option will be supplied from the
same power resources as the Base Resource; therefore, it is reasonable
to apply the Base Resource rate. It is not appropriate to apply the
take-or-pay provision to the full requirements option because the first
preference customers will not have a fixed percentage amount under this
option. Western will continue to offer the full requirements option to
the first preference customers.
Comment: A commentor said he assumed that the load factor referred
to in the full requirements option is intended to apply only to those
first preference customers who cannot measure their demand.
Response: In the future it may be necessary to determine a maximum
capacity from the MEFPC. This calculation will require use of a load
factor for each first preference customer. However, it will not be
necessary to provide a load factor in the contracts, and the Marketing
Plan now reflects this clarification.
Comment: Some commentors who opposed the full requirements option
stated that it is beyond Western's statutory requirements and is unfair
to the other customers. It was suggested that a daily entitlement be
established based on actual generation. First preference customers
should be provided with the Base Resource and should pay the cost of
creating a Custom Product in the same manner as all other customers.
Response: The Acts specify that first preference customers are
entitled to receive up to 25 percent of the additional power generated
as a result of construction of the first preference projects. Western
has discretion in how it fulfills the requirements of the Acts. When
Congress authorized construction of the first preference projects, it
balanced the concerns of the counties of origin and the benefits the
first preference projects would have to the entire CVP. Western
believes that Congress attempted to provide a fair remedy to all
parties involved. It is within the spirit of the Acts to make the
maximum amount of the MEFPC available to the first preference
[[Page 34423]]
customers to the extent it can be used to meet their loads. Power
deliveries under this option would be nearly identical to what they are
today. Western believes this arrangement will have minimal impact on
the other customers; therefore, we will continue to offer the full
requirements option.
Comment: Comments requested that first preference customers who
choose the percentage option be allowed to participate in the exchange
program, using some or all of their MEFPC.
Response: Under the percentage option, first preference customers
would be allowed to participate in the exchange program to the same
extent as the other customers.
Comment: A commentor suggested that the Marketing Plan should
provide for first preference customers to receive 25 percent of the
energy generated from the TRD, exactly as the legislation provides, at
the cost to produce that energy.
Western was requested to provide additional options that would
allow first preference customers to schedule up to 25 percent of the
energy produced as a result of the first preference projects, at prices
that reflect the cost to produce first preference project energy.
Options should provide for first preference customers to call upon
historic generation that they did not use during times when 25 percent
of first preference project energy is less than their load. If first
preference customers are not allowed to call upon historic generation
that they did not use, Western should allow them to trade or bank some
of the 25 percent of what is produced by the first preference projects
in the future.
Other comments recommended that the Marketing Plan should reflect
past legal resolution of issues regarding use and pricing of first
preference power.
Response: The Acts do not provide for Western to furnish more power
than can actually be used by the first preference customers within the
counties of origin. First preference customers are not entitled to
historic generation they were unable to use. Also, the Acts do not
provide for energy banking arrangements. With respect to providing the
energy at the cost to generate power at the first preference projects,
both Acts state,
* * * contracts for the sale and delivery of the additional electric
energy available from the Central Valley Project power system as a
result of the construction of the plants * * *
In Trinity County Public Utilities District vs. Harrington (781 F.2d
163 (9th Cir. 1986)), the court held that since the first preference
projects are operationally and financially integrated with the CVP, the
first preference customers should pay rates based on the operating
costs of the CVP system.
Comment: It was requested that a menu of services be offered to the
first preference customers, coupled with certain first preference
rights, like the sale of energy at first preference project cost.
Response: First preference customers are offered two options--the
full requirements option and the percentage option. Under the
percentage option, first preference customers may choose to customize
their allocation with the Custom Product and participate in the
exchange program. See Western's response above concerning rates for
first preference customers.
Comment: One commentor stated that the percentage option could not
be used by first preference customers to gain greater benefits than
would be available under the full requirements option, even though they
are entitled to greater benefits. The commentor suggested that, other
than a few differences, the percentage option makes first preference
customers almost equal to other customers.
Response: The principal benefit granted to first preference
customers under the Acts is the first right to purchase a portion of
the additional generation made available to the CVP as a result of the
construction of the first preference projects, for use in the counties
of origin. Under the percentage option, the first preference customers'
allocations will be determined similarly to the other customers.
However, first preference customers' allocation percentages will be
based on their actual loads, not on a CRD. First preference customers
will not be subject to adjustments in their allocation percentages for
the resource pools. Additionally, first preference customers will have
the opportunity to adjust their allocation percentages, with a 7-month
notice to and approval by Western, up to their share of the MEFPC.
Western believes that both the percentage option and the full
requirements option provide the benefits required under the Acts.
Comment: One commentor stated that 12 months of load data is not
reflective of actual usage, and requested that Western modify the
factors used in the calculation to determine a first preference
customer's percentage.
Response: Western has modified the Marketing Plan to provide for
the maximum demand during the previous 4 years to be used in
determining an allocation percentage under the percentage option.
Comment: A few commentors stated that Western is required under
both Acts to provide transmission services to first preference
customers. Additionally, Western was requested to commit to provide
transmission service with the basic service at the basic rate to the
first preference customers. One commentor suggested that first
preference customers should be exempt from Section V.G.
Response: The TRD Act authorizes Western to provide electric
transmission facilities as may be necessary to furnish energy to
Trinity County. Western owns transmission facilities in Trinity County.
Should additional facilities be required, appropriations or customer
advancement of funds would be necessary before such facilities could be
constructed. There is no similar clause in the New Melones Project
provisions of the Flood Control Act of 1962 with respect to Calaveras
and Tuolumne Counties. Western will assist in providing transmission
service to the first preference customers. Although Western is willing
to assist, all customers are ultimately responsible to provide for the
delivery of Federal power to their loads. Accordingly, Section V.G,
requiring customers to obtain their own third-party transmission
service, is applicable to all customers.
Western has voluntarily filed an Open Access Tariff consistent with
FERC Order No. 888. Transmission costs will be identified separately
from power costs, and all transmission users will bear an equitable
share of those costs.
Comment: Comments were received both in favor of and in opposition
to the provisions of the Proposed Plan relating to the first preference
customers. Those in favor of the provisions stated they are appropriate
and encouraging. Those in opposition stated the provisions exceed
Western's requirements under the Acts and provide the first preference
customers with better products than those offered to the other
customers. Some first preference customers indicated dissatisfaction
with the benefits they are currently receiving under their respective
Acts in comparison to the sacrifices they made to allow construction of
the first preference projects.
Response: To compensate the counties of origin for their
sacrifices, both Acts require Western to provide the counties of origin
with the amount of energy they can use, up to 25 percent of the
additional energy generated by the CVP as a result of the construction
of the respective first preference projects. Under its discretionary
authority, Western determines the manner in which this energy is made
[[Page 34424]]
available to first preference customers. Western believes it is
appropriate to continue to provide these customers with the opportunity
to choose between the two options in the Marketing Plan. This will
allow those customers to decide how to make the best use of the
benefits they are entitled to receive. Whether either of the options
results in a ``better'' product than that received by other customers
would depend on many factors outside of Western's control, such as
future energy prices, and is secondary to meeting the spirit and intent
of the Acts.
Comment: A comment requested that Western provide a summary
supporting the Marketing Plan's compliance with the TRD Act.
Response: Section 4 of the TRD Act of 1955 states,
Contracts for the sale and delivery of the additional electric
energy available from the Central Valley Project power system as a
result of the construction of the plants herein authorized and their
integration with that system shall be made in accordance with
preferences expressed in the Federal reclamation laws: Provided,
That a first preference, to the extent of 25 per centum of such
additional energy, shall be given, under Reclamation law, to
preference customers in Trinity County, California, for use in that
county, who are ready, able, and willing within 12 months after
notice of availability by the Secretary, to enter into contracts for
the energy: Provided further, That Trinity County preference
customers may exercise their option on the same date in each
successive fifth year providing written notice of their intention to
use the energy is given to the Secretary not less than 18 months
prior to said date.
In accordance with the TRD Act, Section VI of the Marketing Plan
provides that Western will calculate and make available to preference
customers/entities in Trinity County, to the extent they can use it
within that county, 25 percent of the additional energy made available
to the CVP as a result of the construction of the TRD. These first
preference customers have the right to this power before it is made
available to other preference customers. Both options provide that the
power be made available to these first preference customers to meet
their needs, and the amount of power can be increased until it reaches
the limit set forth in the TRD Act. A first preference entity may
exercise its rights to use a portion of the MEFPC by providing written
notice to Western at least 18 months prior to the anniversary date of
the first preference project located in its county.
Comment: A commentor supported dividing the MEFPC from the New
Melones Project between Calaveras and Tuolumne Counties. That commentor
requested a provision be added to the Marketing Plan, allowing the
counties of Calaveras and Tuolumne to combine their allocations for the
purpose of joint load management.
Response: Western is willing to consider combining allocations for
the New Melones' counties of origin if it is requested by the affected
parties. Such an arrangement is an operational procedure and does not
need to be specified in the Marketing Plan.
Comment: A comment suggested that Western should share the revenue
received from sales of unused first preference power with the first
preference customers.
Response: Under applicable legislation, there is no basis to share
revenues with the first preference customers.
Comment: Some first preference customers stated that they are
assuming that they will not be charged for scheduling services. Western
was requested to clarify the phrase ``scheduling arrangements''
(Proposed Plan Section V.C).
Response: The phrase ``scheduling arrangement'' as used in Section
V.C of the Proposed Plan was included because Western anticipates that
power deliveries will no longer be determined after the fact, which is
allowed under Contract 14-06-200-2948A. Schedules will be agreed upon
prior to delivery. Scheduling is required under both options for the
first preference customers, as well as for all other customers. Under
the restructured electric utility industry in California, Western or
the customer's scheduling agent will be required to provide schedules
for all power deliveries within the California Independent System
Operator (ISO) control area. The first preference customers may perform
their own scheduling or contract with Western or a third party to
perform scheduling services. If Western is requested to perform
scheduling services, the cost will be borne by each customer requesting
such service. This cost will be identified separately from the Base
Resource rate.
Comment: Commentors requested that Western clarify the phrase
``power requirements'' (Proposed Plan Section VI.D.1).
Response: The reference to ``power requirements'' as used in
Section VI.D.1 of the Proposed Plan means the capacity and energy
necessary to serve a first preference customer's load from that first
preference customer's share of the MEFPC. The statement concerning
power requirements has been clarified in the Marketing Plan.
Comment: A commentor requested that Western clarify the statement
in Section VI.B of the Proposed Plan that Western may purchase power on
behalf of the first preference customers to compensate for any power
loss due to recalculation of the MEFPC.
Response: This provision has been clarified in the Marketing Plan.
Comment: Comments were received stating that priority should be
given to first preference entities that are wholly located within the
counties of origin. Also, if a contract extension is granted to a first
preference customer or a new contract is executed with a first
preference entity that is not entirely located within a county of
origin, it should be for power withdrawable to serve first preference
customers/entities that are wholly located within that county of
origin. A comment also requested the definition of a first preference
customer/entity include the following language,
one which serves and provides a direct and measurable benefit to the
residents of the counties of Trinity, Calaveras, and Tuolumne.
Response: The definition of a first preference customer/entity must
be consistent with the Acts and Reclamation law. Both Acts provide for
electric service to be made available to entities who qualify for
preference under Reclamation law and are located in their respective
counties. Therefore, entities located in Tuolumne, Calaveras, or
Trinity Counties who are preference entities qualify for first
preference rights. The Marketing Plan is consistent with the Acts.
Comment: A commentor said he assumed that Section VI.E of the
Proposed Plan is applicable only to new first preference customers.
Response: Section VI.E of the Proposed Plan, regarding applications
for first preference power, applies only to first preference entities.
First preference entities are entities who are qualified to use, but
are not currently using, preference power within a county of origin.
They are qualified to be first preference customers but are not yet
customers.
Comment: One commentor suggested that first preference customers
had been inappropriately exempted from Section V.B, allocation
percentage adjustment clause, as referenced in Section VI.J of the
Proposed Plan.
Response: Western has determined that Section V.B will be
applicable to the first preference customers, and the Marketing Plan
has been so modified.
[[Page 34425]]
VII. Transmission
Comment: One commentor stated that Western's transmission
obligations under separate transmission contracts must be honored.
Another commentor asked how Western plans to deal with the DOE Labs'
100 MW entitlement on the California-Oregon Transmission Project and
their capacity entitlement on the Tracy Tie Line.
Response: The Marketing Plan does not modify Western's existing
contractual transmission rights or obligations, including DOE's
entitlements.
Comment: A commentor expressed concern that the unbundling of
transmission service from power services would have an adverse impact
on Western's customers, and Western should not require customers to go
through a separate process to obtain transmission. It was suggested
that Western make a ``delivered'' product available, or otherwise use
transmission assets to firm the Base Resource, particularly in dry
years. It was further suggested that, if customers use the transmission
systems of others for delivery of CVP power, they should still be
responsible for a portion of Western's transmission system costs.
Response: Western is not a FERC jurisdictional utility, but has
agreed to comply with the spirit and intent of FERC Order No. 888, to
the extent it does not conflict with Western's legislative mandates. If
it is feasible in the restructured electric utility industry, Western
is willing to evaluate bundled services, including use of its
transmission access to the Northwest, during further development of the
Base Resource, Optional Purchase, and Custom Products. All customers
who use Western's transmission system will share cost responsibility
for the transmission system.
Comment: One commentor stated that Western's current Pacific
Intertie transmission service level does not fully reflect Western's
ownership of its portion of the Pacific Intertie.
Response: Western's current level of Pacific Intertie transmission
is outside the scope of the Marketing Plan.
Comment: One commentor stated that Western needs to consider its
products' impacts on other customers, particularly Western's direct-
connect customers who rely on Western's transmission system.
Response: Western considered the potential impacts of its products
on all customers, including direct-connect customers. It is Western's
intent to offer products which are useful and beneficial to all
customers.
Comment: One commentor objected to Western's proposal to assess
transmission losses to customers that are directly connected to
Western's transmission system.
Response: Under the Marketing Plan, power will be available as a
system sale, not from specific points of generation. It is necessary to
account for the power that is lost between generation and load.
Therefore, all power deliveries using the CVP transmission system will
be subject to loss assessments.
Comment: One commentor requested Western assume a position of
advocacy on its customers' behalf in regard to access and pricing of
third-party transmission. Western was urged to reserve sufficient
capacity on its transmission system to accommodate its customers'
requirements for wheeling of both CVP and purchased firming power.
Western was encouraged to explore ways in which its customers will have
a superior entitlement to schedule capacity on Western's transmission
system, while avoiding the problem of double-billing for transactions
utilizing both the Federal and non-Federal systems.
Response: Access to and pricing of third-party transmission is
outside the scope of the Marketing Plan. Western will provide
transmission services as appropriate in conjunction with its power
sales in a manner consistent with FERC Orders and legislated mandates.
Use of Western's transmission resources will be determined as the
products and services to be provided by Western are further developed.
VIII. Pricing and Rates
Comment: Commentors expressed concerns that, in order to commit to
a long-term Marketing Plan, a clear idea of prices and availability of
power is needed. They stated that the bulk power market is often
trading below Western's current price range, and uncertainties such as
the Restoration Fund make it even more unattractive to choose Western.
Response: Western will sell the Base Resource at a cost-based rate,
and the Custom Product at a pass-through cost. The ratemaking process
is separate from the Marketing Plan; however, as in all Administrative
Procedure Act processes, public participation will be encouraged. Costs
and availability will be more clearly identified by the time
commitments are required for the Base Resource.
Western has no control over Restoration Fund costs; however,
Western is striving to minimize Western components of power costs and
customize products in an attempt to provide the best possible service
at the lowest possible rates consistent with sound business principles.
Western expects its prices to be at or below the bulk market by the
time the Marketing Plan goes into effect.
Comment: Although the take-or-pay method was commented upon
favorably, some commentors stated take-or-pay contracts require details
on prices and products, and are unrealistic unless they are for short
terms. A comment was received favoring cost-of-service ratemaking with
a take-or-pay provision for ``must-run power.''
Response: The take-or-pay approach is expected to provide adequate
revenues to ensure project repayment. The Base Resource will be sold at
a cost-based rate that will be developed in a public process in which
customers and interested parties may participate. Other products will
be sold on a pass-through-cost basis. By the time product commitments
are required, individual customer need and pricing and availability
information will be more clearly defined.
Comment: A commentor requested that Western negotiate for firming
resources on behalf of its entire customer base so that certain
customers will not be competing in the bulk power market against
Western.
Response: The Marketing Plan reflects the option for Western to
negotiate for firming as part of the Custom Product on behalf of its
entire customer base, a group of customers, or individual customers, if
requested by those customers.
Comment: Western should postpone a decision on Washoe Project cost
recovery until more definitive information can be provided.
Response: Western believes all necessary information concerning the
marketing of Washoe Project power is available and has been considered.
Western sees no benefit in delaying the decision to market Washoe
Project power with the CVP resource.
IX. Industry Restructuring
Comment: A commentor stated that restructuring has changed the
rules of the game to the point that Western's proposals are
inconsistent with public interests. Another commentor encouraged
Western to retain flexibility to accommodate changes in the industry.
Response: Western believes it is in the public interest to provide
some resource certainty to its customers and to protect the Federal
investment in project facilities. The Marketing Plan is designed to be
flexible enough to respond to changes in CVP operations and the
industry, and to provide the
[[Page 34426]]
greatest value to customers and the Federal Government.
Comment: A commentor asked if joining the California ISO will pose
any problems for Western.
Response: Whether Western will join the California ISO is a
separate decision from development of the Marketing Plan. The Marketing
Plan does not preclude Western's participation in the California ISO.
Comment: A commentor suggested that Western should recognize the
new competitive market and help its preference customers wherever
possible with competition transition charge problems.
Response: Western designed the Marketing Plan to be flexible to
respond to changes in the industry and provide the greatest value to
its customers. Products and services available under the Marketing Plan
can be customized to meet individual customer's needs in the new
competitive market.
Competition transition charges are outside the scope of the
Marketing Plan.
Responses to Comments Received on the Notice of Public Process on
Resource Pool Size (64 FR 4646, January 29, 1999)
During the public consultation and comment period, Western received
five letters commenting on the Sierra Nevada Region's resource pool
size. No comments were received during the February 9, 1999, public
meeting in Folsom, California. Western reviewed and considered all
comments received by the end of the public consultation and comment
period, March 1, 1999, in preparation of the Marketing Plan.
The following is a summary of the comments received during the
consultation and comment period, and Western's responses to those
comments.
Comment: Some comments stated that the proposed sizes of the
resource pools were adequate to meet the needs of new customers,
including the fair share needs of eligible Native American tribes.
Response: Western considered the needs of new customers, including
Native American tribes, when determining the sizes of the resource
pools during development of the Marketing Plan. Western concurs with
this comment.
Comment: A commentor stated that a larger allocation percentage,
such as 30 percent, would be necessary for certain Native American
tribes in Southern California. That commentor also suggested that an
allocation be set aside for them and dedicated to tribal economic
development.
Response: Southern California is outside the primary marketing area
of the Sierra Nevada Region. The Desert Southwest Customer Service
Region of Western serves Southern California and will develop its
marketing program prior to the expiration of its current electric
service contracts.
Comment: As Western's Marketing Plan becomes more definitive, it
would be beneficial for PG&E to review the Marketing Plan in advance to
assure consistency with any possible post-Contract 14-06-200-2948A
(integration contract with PG&E) contractual relationship.
Response: Under the Administrative Procedure Act, Western cannot
discuss the final Marketing Plan with any entities prior to
publication.
Comment: In determining the level of benefits to Native Americans,
Western should take into account the benefits currently received
through rural electric cooperatives serving the reservations. Western
should attempt to fairly distribute the benefits of low-cost Federal
hydropower, ensuring equity among all eligible tribes and existing
customers.
Response: The allocation and eligibility criteria in the Marketing
Plan were developed to ensure the benefits of Federal power were
equitably distributed among new customers, including eligible Native
American tribes, and existing customers.
Comment: Power could be provided to a utility to serve a tribe;
however, the tribe would actually hold the allocation. By way of a bill
crediting system, the Federal power benefits could be passed on to the
tribe through a credit on its utility bill.
Response: Western intends to allocate power directly to any
eligible Native American tribes that apply for power. The Sierra Nevada
Region will work with tribes to receive power under the California
direct access rules or other applicable arrangements, which may include
bill crediting.
Comment: If a Native American tribe establishes a utility and seeks
an allocation from the resource pool, that tribal utility should be
treated as a utility applicant and subject to the same qualifications
and provisions to which all Federal power customers are subject.
Response: Native American tribal utility applicants will be treated
similarly to other utility applicants.
Summary of Revisions to the Proposed Plan
Western revised the Marketing Plan as a result of the comments
received during the comment period and public forums. Additionally,
some changes have been made to more clearly define the intent, but do
not change the original proposal. The major revisions are summarized as
follows.
The definitions of administrator, curtailable power, diversity
power, load factor, long-term, NDA Act power, peaking, power marketing
initiative, unbundled, and withdrawable have been deleted. These
definitions were deleted because they are not necessary terms in the
final Marketing Plan. The definition of customer was deleted and will
be used as a generic term to refer to new allottees and/or existing
customers. A definition for the Optional Purchase was added to assist
in understanding that product. These modifications appear in Section I,
and are used throughout the Marketing Plan.
In the formulas in Section IV.A.1 and IV.A.2, Western will base an
existing customer's allocation percentage on its extension CRD as of
December 31, 2003, rather than December 31, 2001. Western will adjust
an existing customer's percentage on December 31, 2003, if its maximum
monthly peak load for the previous 3 years is less than its extension
CRD, rather than basing the existing customer's extension CRD on 104
percent of its load during the previous 4 years. This modification also
appears in Appendix A.
Extension CRD was modified to include NDA Act power used for
economic development. This modification appears in Section I and
Appendix A.
Western has decided not to market unused first preference power on
a withdrawable basis. Unused first preference power will be included as
part of the Base Resource and available to all other customers.
Sections I and III were modified. Section V.F of the Proposed Plan has
been deleted.
The commitment date has been changed to December 31, 2000, for the
Base Resource and Optional Purchase, and to December 31, 2002, for the
Custom Product. Additionally, Western may extend the commitment dates
for the Base Resource, Optional Purchase, and Custom Product if Western
determines it is in the best interest of Western and the customers.
This modification appears in Sections III and V.
Unused power resources may be marketed outside the primary
marketing area. This modification appears in Section III.
Existing customers must commit to the Optional Purchase for a 10-
year period, from January 1, 2005, through December 31, 2014, rather
than an annual or greater period. This modification appears in Section
III.
The Call for Resource Pool Applications will be published in a
[[Page 34427]]
separate Federal Register notice. This modification appears in Section
IV.B.2.e.
Existing customers may apply for a resource pool allocation if
their extension CRD is not more than 15 percent of their peak load in
the calendar year prior to the Call for Applications, rather than
calendar year 1996. This modification appears in Section IV.B.2.g.
Requests to serve new loads that are less than 1 MW, but at least
500 kW, will be allowed if they can be aggregated so Western can
schedule and deliver to a minimum load of 1 MW. This modification
appears in Section IV.B.2.h.
Western will base a resource pool allocation on an applicant's peak
demand during the calendar year prior to publication of the Call for
Applications. The amount used to determine a resource pool allottee's
allocation percentage will not be rounded up to the nearest 100 kW.
This modification appears in Section IV.B.3.b.
Eligible Native American entities will receive greater
consideration for an allocation of up to 65 percent of their peak load
in the calendar year prior to the Call for Applications. This
modification appears in Section IV.B.3.e.
First preference customers will be subject to Section V.B, which
clarifies that allocation percentages provided for in the Marketing
Plan and the electric service contracts shall be subject to adjustment.
This modification appears in Sections V.B and VI.K.
Contracts will include a clause specifying criteria that customers
must meet on an ongoing basis to be eligible to continue receiving
electric service from Western. This modification appears in Section
V.F.
Although Western may assist, each customer will be responsible for
obtaining its own delivery arrangements to its load. This modification
appears in Section V.G.
Western may reduce or rescind a customer's allocation percentage,
upon 90-days notice, if Western determines that the customer is not
using the power to serve its own loads or the allocation amount is
consistently greater than the customer's maximum peak load. This
modification appears in Section V.K.
Contracts may include a clause providing for alternative funding
arrangements, including net billing, bill crediting, reimbursable
financing, and advance payment. This modification appears in Section
V.N.
The initial recalculation of the MEFPC pertaining to this Marketing
Plan will be completed by June 1, 2004. This modification appears in
Section VI.A.
The commitment date for first preference customers to commit to the
percentage option has been changed to December 31, 2002. This
modification appears in Section VI.D.
Under the full requirements option, if there is more than one first
preference customer in a county of origin, or a first preference entity
in that county makes a request for power, Western reserves the right to
establish a maximum amount of power available to each first preference
customer from the MEFPC. This modification appears in Section VI.D.1.
For first preference customers, Western will use the maximum demand
during the previous 4 years, rather than the last 12 months, in
determining an allocation percentage under the percentage option. This
modification appears in Section VI.D.2.
A first preference customer's request for an increase in its
allocation percentage under the percentage option must be accompanied
by justification for the increase. This modification appears in Section
VI.D.2.c.
First preference customers will be subject to Section V.L, which
states that any power not under contract may be allocated at any time,
at Western's sole discretion, or sold as deemed appropriate by Western.
This modification appears in Section VI.K.
Western will provide bundled or unbundled transmission services
with its power sales, consistent with FERC Orders, legislated mandates,
or California ISO Agreements. This modification appears in Section VII.
Appendix A was updated to reflect new customers and changes in CRD.
2004 Power Marketing Plan
This Marketing Plan addresses: (1) The power to be marketed after
December 31, 2004, which is the termination date for all Central Valley
Project (CVP) electric service contracts; (2) the general terms and
conditions under which the power will be marketed; (3) the resources
available to existing customers; and (4) the criteria to determine who
will receive allocations from the resource pools.
The Western Area Power Administration (Western) will continue a
collaborative process in implementing the terms set forth in this
Marketing Plan.
Within broad statutory guidelines and operational constraints of
the CVP and the Washoe Project, Western has wide discretion as to whom
and under what terms it will contract for the sale of Federal power, as
long as preference is accorded to statutorily defined public bodies.
Western markets power in a manner that will encourage the most
widespread use at the lowest possible rates consistent with sound
business principles. All products and services provided under this
Marketing Plan will be subject to operational requirements and
constraints of the CVP and Washoe Project, transmission availability,
purchase power limitations, and Federal authorities.
I. Acronyms and Definitions
As used herein, the following acronyms and terms, whether singular
or plural, shall have the following meanings:
Allocation: An offer from Western to sell Federal power for a
certain period of time, that will convert to a right to purchase after
execution of a contract.
Allocation Criteria: Conditions applied to all applicants who
receive an allocation.
Allottee: An entity receiving an allocation percentage under this
Marketing Plan.
Ancillary Services: Those services necessary to support the
transfer of electricity while maintaining reliable operation of the
transmission provider's transmission system in accordance with good
utility practice. Ancillary services are generally described in Federal
Energy Regulatory Commission (FERC) Order No. 888 (Docket Nos. RM95-8-
000 and RM94-7-001), issued April 24, 1996.
Base Resource: CVP and Washoe Project power output and existing
power purchase contracts extending beyond 2004, determined by Western
to be available for marketing, after meeting the requirements of
project use and first preference customers, and any adjustments for
maintenance, reserves, transformation losses, and certain ancillary
services.
Capacity: The electrical capability of a generator, transformer,
transmission circuit or other equipment.
Central Valley Project (CVP): A multipurpose Federal water
development project extending from the Cascade Range in northern
California to the plains along the Kern River, south of the City of
Bakersfield.
Contract Principles: Provisions of the electric service contracts,
including Western's General Power Contract Provisions.
Contract Rate of Delivery (CRD): The maximum amount of capacity
made available to a customer for a period specified under a contract.
Custom Product: A combination of products and services, excluding
[[Page 34428]]
provisions for load growth, which may be made available by Western per
customer request, using the customer's Base Resource and supplemental
purchases made by Western.
Eligibility Criteria: Conditions that must be met to qualify for an
allocation.
Energy: Measured in terms of the work it is capable of doing over a
period of time; electric energy is usually measured in kilowatthours or
megawatthours.
Existing Customer: A preference customer with a contract to
purchase firm power, offered under a previous allocation process or
marketing plan, that extends through December 31, 2004.
Extension CRD: An existing customer's CRD exclusive of diversity
and curtailable power, and peaking/excess capacity, as it may be
adjusted in accordance with this Marketing Plan.
Firm: A type of product and/or service that is available to a
customer at the times it is required.
First Preference Customer/Entity: A preference customer and/or a
preference entity (an entity qualified to use, but not using preference
power) within a county of origin (Trinity, Calaveras, and Tuolumne) as
specified under the Trinity River Division Act (69 Stat. 719) and the
New Melones project provisions of the Flood Control Act of 1962 (76
Stat. 1173, 1191-1192).
General Power Contract Provisions (GPCP): Standard terms and
conditions which are included in Western's electric service contracts.
Integrated Resource Plan (IRP): A process and framework within
which the costs and benefits of both demand and supply-side resources
are evaluated to develop the least total cost mix of utility resource
options.
Kilowatt (kW): A unit measuring the rate of production of
electricity; one kilowatt equals one thousand watts.
Marketing Plan: Western's final 2004 Power Marketing Plan for the
Sierra Nevada Region.
Megawatt (MW): A unit measuring the rate of production of
electricity; one megawatt equals one million watts.
National Defense Authorization Act (NDA Act): Section 2929 of the
National Defense Authorization Act, Pub. L. 103-160, 107 Stat. 1547,
1935 (1993), which provides that, for a 10-year period (starting in
1993), the CVP electric power allocations to military installations in
the State of California, which have been closed or approved for
closure, shall be reserved for sale through long-term contracts to
preference entities which agree to use such power to promote economic
development at the military installations closed or approved for
closure.
Optional Purchase: An additional increment of power purchased by
the Sierra Nevada Region at the request of an eligible existing
customer on a pass-through-cost basis. Such power will be made
available as a replacement for the Base Resource that is unavailable to
that existing customer due to the Sacramento Municipal Utility
District's (SMUD) percentage right of 360/1,152 of the Base Resource
provided for under the SMUD Settlement Agreement. The Optional Purchase
will terminate on December 31, 2014.
Power: Capacity and energy.
Preference: The requirements of Reclamation law which provide that
preference in the sale of Federal power be given to certain entities,
such as municipalities and other public corporations or agencies and
also to cooperatives and other nonprofit organizations financed in
whole or in part by loans made pursuant to the Rural Electrification
Act of 1936 (Reclamation Project Act of 1939, section 9(c), 43 U.S.C.
485h(c)).
Primary Marketing Area: The area which generally encompasses
northern and central California extending from the Cascade Range to the
Tehachapi Mountains, and west-central Nevada.
Project Use: Power as defined by Reclamation law and/or used to
operate CVP and Washoe Project facilities.
Reclamation Law: Refers to a series of Federal laws with a lineage
dating back to the turn of the century. Viewed as a whole, those laws
create the framework under which Western markets power.
Sierra Nevada Region: The Sierra Nevada Customer Service Region of
the Western Area Power Administration.
Washoe Project: A Federal water project located in the Lahontan
Basin in west-central Nevada and east-central California.
Western: Western Area Power Administration, United States
Department of Energy, a Federal power marketing administration
responsible for marketing and transmitting of Federal power pursuant to
Reclamation law and the DOE Organization Act (42 U.S.C. 7101-7352).
II. Base Resource
The Base Resource, as defined in Section I, will include CVP and
Washoe Project generation supported by certain power purchases. CVP
generation (energy and capacity) will vary hourly, daily, monthly, and
annually, because it is subject to hydrological conditions and other
constraints that may govern CVP operations. CVP generation must be
adjusted for project use, maintenance, reserves, transformation losses,
and certain ancillary services before CVP generation is available for
marketing. The power resources will be further adjusted for
transmission losses to the point of delivery. The power resources may
also be adjusted for first preference customers, when first preference
customers' needs increase, up to the maximum entitlement of first
preference customers.
Western will market part of the 3.65 MW and estimated annual energy
generation of 10,000 MWh available from the Washoe Project as part of
the Base Resource. The U.S. Department of the Interior, Fish and
Wildlife Service Lahontan National Fish Hatchery and Marble Bluff Fish
Facility are project use loads of the Washoe Project and have first
call on those power resources. The generation available after serving
the Fish and Wildlife Service needs will be marketed with the CVP power
resources. The Washoe Project is subject to the same variability and
constraints as the CVP.
Western will also include any power available from existing power
purchase contracts with terms extending beyond 2004 in the Base
Resource. Currently, Western has a contract with Enron Power Marketing,
Inc., that has a final termination date of December 31, 2014.
The adjustments and variables discussed above will influence the
amount of Base Resource available to customers. During some critically
dry months, purchases may be required to meet project use and
obligations to first preference customers, and only a minimal amount of
Base Resource will be available during such months. The usability of
the Base Resource for meeting customers' loads will be directly related
to the amount of firming provided by Western and a customer's ability
to integrate this power resource into its power resource mix.
III. Products and Services
Western will market its Base Resource alone or in combination with
the Optional Purchase and/or Custom Product, which could include
purchasing some level of firming power on behalf of all customers, a
group of customers, or individual customers. All costs incurred by
Western in providing additional services to customers will be paid by
those customers using the services. The degree to which Western
continues to purchase power will depend on customer requests and
Federal authorities. After the effective date of this Marketing Plan,
Western will determine, in a collaborative process with the customers,
the best use of Western's power and transmission
[[Page 34429]]
resources to provide the Base Resource, Optional Purchase, and Custom
Products.
Each allottee will be allocated a percentage of the Base Resource.
All customers will be required to commit to the Base Resource no later
than December 31, 2000.
Upon request, Western will provide a qualified existing customer
with the Optional Purchase. Commitments to the Optional Purchase must
be made by December 31, 2000. Existing customers requesting the
Optional Purchase must commit to the Optional Purchase at the time a
commitment is made for the Base Resource, through December 31, 2014.
Upon request, Western may develop a Custom Product for any
customer. A Custom Product may include ancillary services, reserves,
etc., or may include Western purchasing additional resources, including
firming power, to provide some of these services. Commitments to
purchase a Custom Product must be made by December 31, 2002, for a
period of no less than 5 years of service, beginning January 1, 2005.
Thereafter, the Custom Product will be offered for periods as agreed to
by Western.
Western may extend the commitment dates for the Base Resource,
Optional Purchase, and Custom Product if Western determines it is in
the best interest of Western and the customers.
Any unused power resources may be marketed under terms and
conditions and for periods of time as determined by Western, and may be
marketed outside the primary marketing area.
Western will establish and manage an exchange program to allow all
customers to fully and efficiently use their power allocations. The
exchange program will be further developed by Western through a
collaborative process with all customers. Specific criteria for the
exchange program will be included in electric service contracts. Any
power under contract that cannot be used on a real-time basis, due to a
customer's load profile, must be offered under this exchange program to
Western or other preference customers.
IV. Resource Available to Existing Customers and Resource Pool
Allocations
Western will allocate a portion of the Base Resource to existing
customers and set aside a portion for new allocations. Effective
January 1, 2015, Western will reduce all customers' allocation
percentages by up to 2 percent to establish a 2015 Resource Pool.
Initially, an existing customer, except first preference customers and
the Sacramento Municipal Utility District (SMUD), will be allocated 96
percent of its pro rata share of the Base Resource based on the ratio
of the existing customer's extension CRD to the total existing
customers' extension CRD. First preference customers are subject to
specific legislation and are addressed in Section VI. SMUD will have a
specific allocation through 2014 based on a prior settlement agreement.
Effective January 1, 2015, Western will recalculate the percentages
for all existing customers, including SMUD and customers receiving an
allocation from the 2005 Resource Pool. Western will derive each
customer's new percentage based on the change in SMUD's percentage
described later in this section and the reduction for the 2015 Resource
Pool. The new percentages will be applicable from 2015 through 2024.
A. Resource Available to Existing Customers
Existing customers, excluding SMUD, will have a right to purchase a
percentage of the Base Resource based on the ratio of each existing
customer's extension CRD to the total of all existing customers'
extension CRD, excluding SMUD, under the terms of this section. Current
extension CRD are set forth in appendix A. From 2005 through 2014, SMUD
will have a right to purchase 360/1,152 of the Base Resource, as
referenced in the Settlement Agreement with SMUD, Contract DE-MS65-
83WP59070, dated April 15, 1983. All other existing customers have a
right to purchase the Base Resource amount remaining after Western
adjusts it to accommodate SMUD's rights and the 2005 Resource Pool.
After 2014, Western will adjust SMUD's right to purchase the Base
Resource to reflect the ratio of SMUD's extension CRD to the total of
all existing customers' extension CRD. SMUD's right will also be
adjusted by 4 percent (2005 Resource Pool adjustment) and up to an
additional 2 percent to accommodate the 2015 Resource Pool.
Due to the diversity among existing customers' loads, including
SMUD's load, existing customers' total extension CRD exceeds the 1,152
MW referenced in the SMUD Settlement Agreement. This Marketing Plan
will result in SMUD receiving a proportionately greater share of the
Base Resource than other existing customers if the total extension CRD
remains at a level greater than 1,152 MW. Therefore, existing
customers, excluding SMUD and first preference customers, have the
right to request the Optional Purchase.
The following extension formulas are used to determine existing
customers' purchase rights to the Base Resource. Application of these
formulas also determines each existing customer's right to the Optional
Purchase. No allocation percentage will be based on an extension CRD
greater than an existing customer's load.
1. For the period 2005 through 2014, existing customers' purchase
rights to the CVP resource are calculated as follows:
a. SMUD's purchase right = (360/1,152) x BR
b. Other existing customers' purchase rights = (A/B) x ABR
Where:
A = An individual existing customer's extension CRD. Western may adjust
``A'', if Western determines that, as of December 31, 2003, the
extension CRD is greater than the existing customer's maximum monthly
peak load for the previous 3 years or if the existing customer's
extension CRD has been changed from the amount set forth in Appendix A
of this Marketing Plan.
B = The sum of all values for ``A'', excluding SMUD.
BR = Base Resource.
ABR = Adjusted Base Resource = {BR--[(360/1,152) x BR]} x (100%--
RP%). After 2014, the SMUD adjustment of [(360/1,152) x BR] will be
deleted.
RP% = 2005 Resource Pool percentage.
2. Existing customers' rights to the Optional Purchase will be
calculated as follows:
Individual existing customer's Optional Purchase = (A/B) x TOP
Where:
TOP = Total Optional Purchase = [(360/1,152)--(361/C)] x BR x
(100%--RP%).
C = The sum of all existing customers' extension CRD, including SMUD.
B. Resource Pool Allocations
Western will reserve a portion of the power available after 2004
for allocation to eligible applicants.
1. Resource Pool Amount:
The 2005 Resource Pool consists of up to 4 percent of the power
resources available after 2004. Western will also establish a 2015
Resource Pool. The 2015 Resource Pool will consist of up to 2 percent
of the power resource available after 2014, plus a portion of the
resource that becomes available from adjusting SMUD's percentage. That
portion will be equal to what SMUD would have been required to
contribute to the 2005 Resource Pool. SMUD will also be subject to the
2015 Resource Pool adjustment of up to 2 percent.
[[Page 34430]]
Western will, at its discretion, allocate a percentage of the 2005
Resource Pool to each applicant that meets the eligibility and
allocation criteria. This allocation percentage will be multiplied by
the 2005 Resource Pool percentage to determine the applicant's
percentage of the Base Resource. Allocations from the 2015 Resource
Pool will be determined through a separate public process conducted
prior to 2015.
2. Eligibility Criteria:
Western will apply the following eligibility criteria to all
applicants seeking a resource pool allocation under this Marketing
Plan.
a. Applicants must meet the preference requirements of Reclamation
law.
b. Applicants should be located within Sierra Nevada Region's
primary marketing area. If the Sierra Nevada Region's power resources
are not fully subscribed, Western may market its resource outside the
primary marketing area.
c. Applicants that require power for their own use must be ready,
willing, and able to receive and use Federal power. Federal power shall
not be resold to others.
d. Applicants that provide retail electric service must be ready,
willing, and able to receive and use the Federal power to provide
electric service to their customers, not for resale to others.
e. Applicants must submit an application in response to the Call
for Resource Pool Applications under a separate Federal Register
notice.
f. Native American applicants must be a Native American tribe as
defined in the Indian Self Determination Act of 1975 (25 U.S.C. 450b,
as amended).
g. Existing customers may apply for a resource pool allocation if
their extension CRD, set forth in Appendix A, is not more than 15
percent of their peak load in the calendar year prior to the Call for
Applications, and not more than 10 MW.
h. Western will normally not allocate power to applicants with
loads of less than 1 MW; however, allocations to applicants with loads
which are at least 500 kW may be considered, provided the loads can be
aggregated with other allottees' loads to schedule and deliver to a
minimum load of 1 MW.
3. Allocation Criteria:
Western will apply the following allocation criteria to all
applicants receiving a resource pool allocation under this Marketing
Plan.
a. Allocations will be made in amounts as determined solely by
Western in exercise of its discretion under Reclamation law and
considered to be in the best interest of the U.S. Government.
b. Allocations will be based on the applicant's peak demand during
the calendar year prior to the Call for Applications or the amount
requested, whichever is less.
c. An allottee will have the right to purchase power from Western
only upon the execution of an electric service contract between Western
and the allottee, and satisfaction of all conditions in that contract.
d. All customers, including those receiving an allocation from the
2005 Resource Pool, will be subject to the 2015 Resource Pool
adjustment.
e. Eligible Native American entities will receive greater
consideration for an allocation of up to 65 percent of their peak load
in the calendar year prior to the Call for Applications.
V. General Criteria and Contract Principles
Western will initially offer existing customers a contract
amendment for the right to purchase a percentage of the Base Resource
after 2004. After allocations are final, resource pool allottees will
be offered a contract to set forth their allocation percentage. In
order to finalize the electric service arrangements, new contracts will
be offered to new and existing customers subsequent to the date product
commitments are required, as set forth in this Marketing Plan. The
following criteria and contract principles will apply to all contracts
executed under this Marketing Plan, except that certain criteria may
not apply to first preference customers' contracts and 2015 Resource
Pool allottees' contracts:
A. Electric service contracts and amendments shall be executed
within 6 months of a contract offer, unless otherwise agreed to in
writing by Western.
B. Allocation percentages provided for in this Marketing Plan and
the electric service contracts shall be subject to adjustment.
C. All power supplied by Western will be delivered pursuant to a
scheduling arrangement.
D. All power will be provided on a take-or-pay basis. All costs
associated with the products and services provided, including costs
associated with ancillary services, Optional Purchases, Custom
Products, and transmission will be passed on to the customer(s) using
the product or service.
E. Contract amendments and contracts shall require a written
commitment to a percentage of the Base Resource and the Optional
Purchase on or before December 31, 2000, and the Custom Product on or
before December 31, 2002. Western may extend the final commitment dates
for the Base Resource, Custom Product, and Optional Purchase.
F. Contracts will include a clause specifying criteria that
customers must meet on a continuous basis to be eligible to receive
electric service from Western.
G. Upon request, Western shall provide, or assist each new and
existing customer in obtaining, transmission arrangements for delivery
of power marketed under this Marketing Plan; nonetheless, each entity
is ultimately responsible for obtaining its own delivery arrangements
to its load. Transmission service over the CVP system will be provided
in accordance with Section VII of this Marketing Plan.
H. Contracts shall provide for Western to furnish electric service
effective January 1, 2005, through December 31, 2024.
I. Specific products and services may be provided for periods of
time as agreed to in the electric service contract.
J. Contracts shall incorporate Western's standard provisions for
electric service contracts, integrated resource plans, and General
Power Contract Provisions, as determined by Western.
K. Contracts will include a clause that allows Western to reduce or
rescind a customer's allocation percentage, upon 90-days notice, if
Western determines that (1) the customer is not using this power to
serve its own loads, except as otherwise specified in Section III; or
(2) the allocation amounts are consistently greater than the customer's
maximum peak load.
L. Any power not under contract may be allocated at any time, at
Western's sole discretion, or sold as deemed appropriate by Western.
M. Contracts will include a clause providing for Western to adjust
the customers' allocation percentage for the 2015 Resource Pool.
N. Contracts may include a clause providing for alternative funding
arrangements, including net billing, bill crediting, reimbursable
financing, and advance payment.
VI. First Preference Entitlement and Allocation
The Trinity River Division Act and the New Melones Project
provisions of the Flood Control Act of 1962 (Acts) specify that
contracts for the sale and delivery of the additional electric energy,
available from the CVP power system as a result of the construction of
the plants authorized by these Acts and their integration into the CVP
system,
[[Page 34431]]
shall be made in accordance with preferences expressed in Federal
Reclamation laws. These Acts also provide that a first preference of up
to 25 percent of the additional energy shall be given, under
Reclamation law, to preference customers in the counties of origin
(Trinity, Tuolumne, and Calaveras), for use in those counties, who are
ready, willing, and able to enter into contracts for the energy.
To meet the requirements of the Acts, Western published the Final
Withdrawal Procedures (51 FR 7702, March 5, 1986). This Marketing Plan
supersedes the Final Withdrawal Procedures, or any successor
procedures, as of January 1, 2005.
Western will calculate and allocate the maximum entitlements of
first preference customers (MEFPC). The MEFPC is the maximum amount of
energy available to first preference customers/entities, in accordance
with the following:
A. The MEFPC will be calculated separately for the New Melones
Project, Calaveras and Tuolumne Counties, and the Trinity River
Division (TRD), Trinity County (first preference projects). To
determine the 25 percent of additional energy made available to the CVP
as a result of the construction of each of these projects, Western will
use the average of the previous 20 years of historical annual
generation. The TRD MEFPC includes generation from Trinity, Carr, and
Spring Creek Powerplants and a portion of the Keswick Powerplant
generation. The MEFPC will be recalculated every 5 years, with the
initial recalculation pertaining to this Marketing Plan completed by
June 1, 2004.
B. Upon recalculation, if the MEFPC from a first preference project
is 10 percent above or below the currently effective MEFPC from that
first preference project, the MEFPC will be adjusted to reflect that
increase or decrease. Western will notify affected first preference
customers at least 6 months before making an adjustment to the MEFPC.
If recalculation reduces the MEFPC to an amount less than the load
previously served, Western may, upon request and at its discretion,
make purchases necessary to replace that amount of power no longer
available. The costs for all such purchases made on behalf of a first
preference customer will be passed on to that first preference
customer.
C. An allocation made to a first preference customer/entity under
this Marketing Plan will be based on the power requirements of that
first preference customer/entity. The sum of allocations of first
preference power, including losses, shall not exceed the MEFPC from
each first preference project, or a county of origin's share of the
MEFPC, except as allowed under Section VI.G below.
D. Western will work with each first preference customer/entity to
identify its power requirements and the best use of its first
preference entitlement. Each first preference customer/entity may elect
one of the product and service options set forth below. A commitment to
one of these options must be made in writing no later than December 31,
2002. If a commitment is not made by December 31, 2002, the full
requirements option will be deemed chosen.
Under each option, the first preference customer will be
responsible for transformation and transmission losses to the first
preference customer delivery point. Transmission losses shall include
losses for CVP transmission and third-party transmission.
1. Full Requirements: Western will provide the first preference
customer with its full power requirements (capacity and energy) up to
its right to the MEFPC at the Base Resource rate. If there is more than
one first preference customer in a county of origin, or a first
preference entity in that county makes a request for power, Western
reserves the right to establish a maximum amount of power available to
each first preference customer from the MEFPC. Payment under this
option will be based on usage.
2. Percentage: Western will determine the allocation percentage in
a manner similar to that of the other customers receiving a power
allocation. The first preference customer's maximum demand during the
previous 4 years will be used in determining an allocation percentage
of the power resource under this option. Power will be provided on a
take-or-pay basis under this option. The following will apply to each
first preference customer selecting this percentage option.
a. First preference customers will not be subject to adjustments
for the resource pool or the SMUD settlement, and will not be eligible
for the Optional Purchase. Under this option, first preference
customers are eligible for the Custom Product as defined in Section
III.
b. The allocation percentage made available to each first
preference customer under this Marketing Plan will be applied to the
power resources which have been adjusted for project use.
c. First preference customers will have the opportunity to have
their allocation percentage adjusted, as agreed to by Western.
Increases, up to a first preference customer's share of the MEFPC, will
require a written notice 7 months in advance of the first day of the
month in which the increase is requested to become effective.
Justification for the increase must accompany the request.
E. A first preference entity may exercise its right to use a
portion of the MEFPC by providing written notice to Western at least 18
months prior to the anniversary date of the first preference project
located in its county. The anniversary date is the successive fifth
year anniversary of the date the Secretary of the Interior declared the
availability of power from the powerplants in the counties of origin.
New applications for service to begin on January 1, 2005, under this
Marketing Plan must be received 18 months prior to January 1, 2002
(i.e., July 1, 2000) for Trinity County and 18 months prior to April 5,
2002 (i.e., October 5, 2000) for Calaveras and Tuolumne Counties. Other
anniversary years applicable to this Marketing Plan are 2007, 2012,
2017, and 2022.
F. If the request of a first preference customer/entity for power,
including adjustment for losses, is greater than the remaining MEFPC
from that county's first preference project, then Western will allocate
the remaining MEFPC to the first preference customer/entity first
making a request for a power allocation or a justified increase in its
allocation percentage.
G. Power allocated to first preference customers/entities in
Tuolumne and Calaveras Counties will be subject to the following
additional conditions:
1. Tuolumne and Calaveras Counties shall each be entitled to one-
half of the New Melones Project MEFPC.
2. If first preference customers in either Tuolumne County or
Calaveras County are not using their county's full one-half share, and
a first preference customer/entity in the other county requests power
in an amount exceeding that county's one-half share, then Western will
allocate the unused power, on a withdrawable basis, to the requesting
first preference customer/entity. Such power may be withdrawn for use
by a first preference customer/entity in the county not using its full
one-half share upon 6-months written notice from Western.
H. Trinity Public Utilities District is currently the sole
recipient of the TRD's first preference rights.
I. Transmission service will be provided in accordance with
applicable laws and Section VII of this Marketing Plan.
[[Page 34432]]
J. For planning purposes, first preference customers may be
required to provide forecasts and other information required by Western
as set forth in the electric service contract.
K. The general criteria and contract principles set forth in
Sections V.A through C, F through L, and N of this Marketing Plan will
apply to first preference customers.
VII. Transmission Service
Western will provide bundled or unbundled transmission services as
appropriate in conjunction with its power sales in a manner consistent
with FERC Orders, legislated mandates, or California ISO Agreements, as
appropriate. Western will determine the use of its transmission
resources concurrently with further development of the products and
services under this Marketing Plan. Specific terms and conditions for
transmission will be provided for in future service agreements.
Dated: June 10, 1999.
Michael S. Hacskaylo,
Administrator.
Appendix A
This Appendix lists the existing customers' CRD amounts and
extension percentages as of May 1, 1999. Final percentages will be
available after December 31, 2003.
----------------------------------------------------------------------------------------------------------------
Extension CRD
(CRD \1\ \2\ Percentage of
Existing customers CRD \1\ (kW) less excluded base resource
types of (2005-2014)
power) \3\
---------------------------------------------------------------------------------------(kW)---------------------
Air Force--Beale................................................ 21,575 21,575 1.42461
Air Force--McClellan \4\........................................ 12,000 12,000 0.79237
Air Force--Onizuka \4\.......................................... 1,500 1,500 0.09905
Air Force--Travis............................................... 12,651 12,651 0.83535
Air Force--Travis/David Grant Medical Center \4\................ 4,000 4,000 0.26412
Air Force--Travis Wherry Housing................................ 1,400 1,400 0.09244
Alameda, City of \5\............................................ 21,145 21,145 1.39622
Arvin-Edison Water Storage District............................. 30,000 30,000 1.98092
Avenal, City of................................................. 622 622 0.04107
Banta-Carbona Irrigation District............................... 3,700 3,700 0.24431
Bay Area Rapid Transit District................................. 4,000 4,000 0.26412
Biggs, City of.................................................. 4,200 4,200 0.27733
Broadview Water District........................................ 500 500 0.03302
Byron-Bethany Irrigation District............................... 2,200 2,200 0.14527
Calaveras Public Power Agency................................... 8,000 .............. ..............
California State University, Sacramento--Nimbus................. 40 40 0.00264
Cawelo Water District........................................... 500 500 0.03302
Corrections--California State Prison--Sacramento................ 2,300 2,300 0.15187
Corrections--Deuel Vocational Institute......................... 1,700 1,700 0.11225
Corrections--Northern California Youth Center................... 1,700 1,700 0.11225
Corrections--Sierra Conservation Center......................... 3,000 .............. ..............
Corrections--Vacaville Medical Facility......................... 1,800 1,800 0.11886
Defense Logistics Agency--Sharpe Facility....................... 4,000 4,000 0.26412
Defense Logistics Agency--Tracy Facility........................ 3,800 3,800 0.25092
East Bay Municipal Utility District \5\......................... 1,965 1,965 0.12975
East Contra Costa Irrigation District........................... 2,500 2,500 0.16508
Eastside Power Authority \5\.................................... 2,961 2,961 0.19552
Energy--Lawrence Berkeley National Laboratory................... 9,000 9,000 0.59428
Energy--Lawrence Livermore National Laboratory.................. 44,711 44,711 2.95229
Energy--Lawrence Livermore, Site 300............................ 2,000 2,000 0.13206
Energy--Stanford Linear Accelerator Center...................... 21,903 12,903 0.85199
Glenn-Colusa Irrigation District................................ 3,343 3,343 0.22074
Gridley, City of................................................ 9,400 9,400 0.62069
Healdsburg, City of \5\......................................... 3,241 3,241 0.21401
James Irrigation District \5\................................... 987 987 0.06517
Kern-Tulare Water District \5\.................................. 987 987 0.06517
Lassen Municipal Utility District............................... 3,000 3,000 0.19809
Lodi, City of \5\............................................... 13,236 13,236 0.87398
Lompoc, City of \5\............................................. 5,197 5,197 0.34316
Lower Tule River Irrigation District \5\........................ 1,965 1,965 0.12975
Merced Irrigation District \4\.................................. 5,000 5,000 0.33015
Modesto Irrigation District \5\................................. 10,805 10,805 0.71346
NASA--Ames Research Center...................................... 80,000 80,000 5.28245
NASA--Moffett Federal Airfield \4\.............................. 5,009 5,009 0.33075
Navy--Naval Weapons Station, Concord \4\........................ 2,898 2,898 0.19136
Navy--Naval Radio Station, Dixon................................ 915 915 0.06042
Navy--Naval Air Station, Lemoore \4\............................ 23,000 23,000 1.51870
Navy--Naval Communications Station, Stockton.................... 3,700 3,700 0.24431
Oakland Army Base............................................... 2,275 2,275 0.15022
Oakland, Port of \4\............................................ 1,000 1,000 0.06603
Palo Alto, City of.............................................. 175,000 175,000 11.55535
Parks & Recreation, California Department of.................... 100 100 0.00660
Parks Reserve Forces Training Area.............................. 500 500 0.03302
Patterson Water District........................................ 2,000 2,000 0.13206
Pittsburg Power Company \4\..................................... 5,000 5,000 0.33015
Plumas-Sierra Rural Electric Cooperative........................ 25,000 25,000 1.65076
[[Page 34433]]
Provident Irrigation District................................... 750 750 0.04952
Rag Gulch Water District........................................ 500 500 0.03302
Reclamation District 2035....................................... 1,600 1,600 0.10565
Redding, City of................................................ 116,000 116,000 7.65955
Roseville, City of.............................................. 69,000 69,000 4.55611
Sacramento Municipal Utility District \7\....................... 361,000 361,000 31.25000
Sacramento Municipal Utility District........................... 100,000 .............. ..............
San Francisco, City and County of \4\........................... 2,600 2,600 0.17168
San Juan Water District......................................... 1,000 1,000 0.06603
San Luis Water District......................................... 6,650 6,650 0.43910
Santa Clara Valley Water District \5\........................... 987 987 0.06517
Shasta Lake, City of............................................ 11,450 11,450 0.75605
Silicon Valley Power............................................ 216,532 136,532 9.01529
Sonoma County Water Agency...................................... 1,500 1,500 0.09905
Trinity Public Utilities District............................... 17,000 .............. ..............
Tuolumne Public Power Agency.................................... 7,000 .............. ..............
Turlock Irrigation District \5\................................. 3,941 3,941 0.26023
Ukiah, City of \5\.............................................. 8,773 8,773 0.57929
University of California, Davis................................. 14,682 14,682 0.96946
West Side Irrigation District................................... 2,000 2,000 0.13206
West Stanislaus Irrigation District............................. 5,200 5,200 0.34336
Westlands Water District \5\.................................... 21,441 21,441 1.41576
2005 Resource Pool \6\.......................................... .............. .............. 2.75000
-----------------------------------------------
Total....................................................... 1,584,537 1,360,537 100.00000
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ CRD temporarily laid off and temporarily allocated to other existing customers is reflected in this Appendix
A, under both CRD and extension CRD, as being returned to the existing customer who received the original
allocation.
\2\ Western will reduce the extension CRD if Western determines that, as of December 31, 2003, the extension CRD
is greater than the existing customer's load.
\3\ Exclusions are diversity, curtailable, and first preference power; and peaking and excess capacity.
\4\ These extension CRD could be adjusted as a result of the NDA Act procedures. Also, new NDA Act customers
could be added through November 30, 2003.
\5\ Westlands Water District has a right to 50 MW through December 31, 2004. Certain existing customers have
been allocated a portion of the 50 MW, subject to withdrawal for use by Westlands Water District. Allocation
percentages effective after December 31, 2004, will be adjusted to reflect changes made as a result of
Westlands Water District's use and withdrawals, in accordance with Section IV.A.1.b.
\6\ The 4 percent 2005 Resource Pool is adjusted for SMUD's non-participation due to the Settlement Agreement.
\7\ 31.25 percent reflects the 360/1,152 ratio in the SMUD Settlement Agreement. After December 31, 2014, SMUD's
percentage will be based on its extension CRD.
[FR Doc. 99-16018 Filed 6-24-99; 8:45 am]
BILLING CODE 6450-01-P
